Covid-19 is a health and economic disaster for many Americans, but the pandemic may also have provided a smidgen of positive impact by changing young adults’ financial habits, according to a new study by Travis Credit Union.
In May, marketing firm Digital Third Coast conducted a survey for Travis Credit Union that entailed 1,879 people who identified themselves as either a millennial or Generation Z (those born between 1981 and 2012) to determine what steps young adults were taking to secure their financial future. A greater percentage of males (51%) participated in the study, compared with females (49%), and the average age of all respondents was 28.
Respondents were nearly unanimous (99%) in saying that saving money was important to them. They were also nearly unanimous (90%) in saying they had taken the first step to accomplishing that goal by opening a dedicated savings account. However, men had saved an average amount of $16,631, while women saved a third less with an average amount of $11,649. Over half of all respondents said they added to their savings on a monthly basis.
One in four respondents said their most important savings goal was for was retirement, and just over half said their savings account was dedicated to that purpose. However, 64% of respondents said they had also established an emergency fund, with an average balance of $23,950.
In the face of the Covid-19 pandemic and recession, millennials and Gen Z respondents are learning the importance of having those funds tucked away for a rainy day.
Two-fifths of respondents (39%) said they had to tap into their savings to stay afloat during the pandemic, using an average of one-third of their total savings to pay for necessities such as food (70%); utilities (48%); rent or mortgage (41%); credit card debt (25%); student loans (22%); car payment (22%); and health care costs (19%).
Three out of four respondents (73%) said that the impact of coronavirus had changed their saving habits and would continue to shape their financial habits going forward. Nearly half of respondents (45%) said they intended to curb their spending; contribute more to savings (43%); build an emergency fund (39%); and contribute more to their retirement account (28%).
This is not the first time a crisis has changed young adults’ relationship with money. One in three respondents cited the 2008 economic recession as a precursor to Covid-19, which they said influenced their saving habits. Nearly half of respondents (42%) said they began saving sooner; 21% said they became more aware of their spending; 19% said they began saving for retirement earlier than planned; and 18% pursued a career with job security.
Nonetheless, 46% said they remain satisfied with their savings, and three out of four respondents said they considered themselves optimistic about their financial future.
According to Kylie Moore, a content strategist at Digital Third Coast speaking on behalf of Travis Credit Union, its never too early or too late for anyone to improve their financial habits by creating a budget, spending less than they save, and working towards a financial goal.